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Businesses hear benefits of health care reform

Date: 
11/13/2009

By Christina Chapman

About four years ago, Bailey's Carpet One Floor & Home of Joliet, Morris and Naperville had to start having its employees contribute to their health care plan.

At the time, the company had been in the business for almost two decades and had always paid for its employees health care, said Randal Bailey, general manager and vice president of the family-owned business. It was a tough decision, but a must.

"We had to ask them to contribute to help off-set expenses. It doesn't put us in the greatest position, because larger companies can cover expenses," Bailey said.

Bailey discussed his company's struggles after Congresswoman Debbie Halvorson's meeting Friday with small business owners on the benefits the health care reform bill will give them.

Halvorson told the audience of about 20 at West Side Music Center in Joliet that health insurance costs for small businesses have increased by 129 percent since 2000. Currently, only 45 percent of the country's small business owners can afford to offer health care to their employees.

Because small businesses have smaller amounts of workers, their health plans have higher premiums and administrative costs, Halvorson said. Premiums are on average about 18 percent higher for small businesses, and their deductibles are more than double, despite having fewer benefits.

"Nearly 60 percent of America's uninsured are small business owners, workers and their families," she said.

West Side Music Center owner Mark Scherf said he and his wife run their business with the help of just one part-time employee. Like any business owner, he hopes to grow his business, but the affiliated costs hinder that from happening right now.

"The only way to really grow in business is to expand, but I couldn't even think about expanding right now because I would need to insure them and I can't afford to do that - not with the rates the way they are," Scherf said.

Halvorson said offering employees health care is one of businesses' biggest expenses and sometimes it can be the "biggest job killer."

Although Bailey's company does offer health care and now requires employee contribution, in the last four years his insurance costs have gone up 78 percent. So far they have not cut health care or employees, but it has all been considered, Bailey said.

Both Bailey and Scherf said they are not sure if they are 100 percent behind the health care reform bill, but it's time for a change.

"I'm not sure if I'm in support of it or not, but I think it's a start," Bailey said.

BENEFITING SMALL BUSINESS


Through the reform bill, which has passed the House and is now with the Senate, Halvorson said there are several measures that will benefit small businesses.

A health care exchange will be offered to qualifying businesses as a voluntary option. Those businesses who currently offer insurance can keep what they have. The exchange will give small businesses access to larger risk pools and will lower administrative costs, she said.

"With a group of five doing (a health care plan) it's going to be a lot, but multiply that by thousands it's going to be less," Halvorson said.

Who can utilize the voluntary exchange changes per year. In 2013, firms with up to 25 employees can join, in 2014 those with up to 50, in 2015 those with up to 100, and in 2016 those of any size can join pending approval by the exchange administrator.

The goal is to increase competition among insurance companies, driving rates down.

Both private and public plans will be available through the exchange nationwide. In addition, it is guaranteed that no pre-existing condition denials can occur and no caps on lifetime coverage are allowed, Halvorson said. There are caps on out-of-pocket expenses.

A variety of plans will be available for comparison in one location with affordable options, she said. To ensure insurance is affordable for people of all incomes, affordability credits will be available for people getting insurance through the exchange.

Individuals looking for help with health insurance will also be eligible for the exchange.

"No longer will people be forced to purchase insurance that costs 12 percent of their income," Halvorson said.

This aspect may be something that will help Scherf directly. Scherf's family is not uninsured, but they are paying a high price to provide themselves with health care.

In order to get a policy, Scherf had to sign off that his back pain was pre-existing and his wife also had to for her Carpal Tunnel Syndrome. The insurance company will not cover any costs affiliated with treatment for these problems.

"Our monthly premium is more than we pay a month in groceries," he said.

REQUIRED COVERAGE


Small businesses that can afford to provide health care coverage for its employees are required to do so, or they can pay a payroll fee to help employees pay for individual plans.

Only businesses with payroll above $500,000 annually will be required to cover their workers, Halvorson said. If a business is less than $500,000 annually in payroll and does not provide insurance, they are exempt from any fees.

If a business does more than $500,000 in payroll and chooses not to offer insurance, it will be required to pay a graduated payroll fee so the employees can get themselves insurance.

If a small business already offers insurance to its employees, there is no fee, Halvorson said.

"Eighty-six percent of all businesses will be completely exempt from the employer mandate," she said.

To help small businesses offer health care, the bill makes them eligible for tax credits to help cover the costs of providing health care.

Businesses with 25 or fewer employees and average wages of $40,000 or less are eligible for the tax credit. The credit is 50 percent for businesses with 10 or fewer employees and $20,000 or less in average wage. The amount of tax credit phases out for these eligible businesses.

A business can receive the tax credit up to two years, but it cannot be used for employees who earn more than $80,000.